MUNCIE, Ind., Jan. 25, 2018 (GLOBE NEWSWIRE) -- First Merchants Corporation (NASDAQ:FRME) reported record fourth quarter 2017 net income of $24.4 million, compared to $22.3 million during the fourth quarter of 2016.  Earnings per share for the period totaled $.49 per share compared to $.55 during the same period in 2016.  Our fourth quarter results included the impact of the recently enacted Tax Cuts and Jobs Act (the “TCJA”).  Specifically, our federal income tax expense was elevated by $5.1 million, or $.10 per share due to deferred tax asset write-downs.  Acquisition expenses related to the completion of our Independent Alliance Banks acquisition totaled $1.4 million, or $.02 per share, for the quarter.

Year-to-date net income totaled a record $96.1 million, compared to $81.1 million during the same period in 2016.  Earnings per share for the year ended December 31, 2017 totaled $2.12 per share, an increase of $.14 per share, or 7.1 percent, over 2016. The enactment of the TCJA resulted in a reduction of annual profits by $5.1 million, or $.11 per share.  Acquisition expenses related to The Arlington Bank and Independent Alliance Banks totaled $12.2 million, or $.18 per share.  Our 2017 franchise expansion impacts balance sheet, income, expense and share growth throughout the financial statements.

Michael C. Rechin, President and Chief Executive Officer, stated, “2017 was a record setting year for First Merchants.  Our results were fueled by the growth of our clients and the skill and commitment of our teammates.  Annual organic loan growth of 12.8 percent, when combined with the acquisitions of Independent Alliance Banks in the Fort Wayne market and The Arlington Bank in the Columbus, Ohio MSA, allowed our total assets to increase by 30 percent for the year.”  Rechin also added, “Profitability enhancements in 2017 are further accelerated by significant tax savings in 2018.  These improvements in our core business allowed First Merchants to achieve a record share price in 2017 and our business begins 2018 with optimism.”

Total assets reached a record $9.4 billion as of year-end and loans totaled a record $6.8 billion, compared to $7.2 billion and $5.1 billion, as of December 31, 2016.  Organic loan growth totaled an annualized rate of 16.7 percent for the fourth quarter and 12.8 percent for the year.  Organic deposits grew at an annualized rate of 15.1 percent in the fourth quarter and 9 percent during the year.  Inclusive of acquisition growth, total deposits reached $7.2 billion as of December 31, 2017, representing a 29.1 percent increase.  Tangible common equity also increased to record levels for the year totaling $834 million, or $16.96 per share, compared to $649 million, or $15.85 per share, as of December 31, 2016.

Net-interest income totaled $78.8 million for the quarter and net-interest margin increased by 20 basis points over the fourth quarter of 2016, totaling 4.10 percent.  Yields on earning assets totaled 4.67 percent and the cost of supporting liabilities totaled .57 percent.  Fair value accretion added 20 basis points to net-interest margin this quarter compared to 18 basis points in the fourth quarter of 2016.

Non-interest income totaled $19.1 million for the quarter, up $3.0 million from the fourth quarter of 2016 total of $16.1 million.  Non-interest expense totaled $56.4 million for the quarter, an increase from $41.9 million during the fourth quarter of 2016, reflecting the inclusion of $1.4 million of merger related expenses.

Tax expense for the quarter totaled $15.2 million, or 38.4 percent of income before income taxes, compared to $7.9 million, or 26.0 percent in the fourth quarter of 2016.  The impact of the deferred tax asset write-downs in 2017 will be more than offset by the savings from the reduced tax rate to be realized in 2018.

The Corporation’s provision expense totaled $1.8 million compared to $2.4 million during the same period in 2016.  The provision expense in the quarter provided allowance coverage for the organic loan growth. The allowance for loan losses now totals $75.0 million as of December 31, 2017, an increase from $66.0 million as of December 31, 2016.  Non-accrual loans totaled $28.7 million as of year-end and the allowance is 1.11 percent of total loans and 1.36 percent of non-purchased loans.

As of December 31, 2017, the Corporation’s total risk-based capital ratio equaled 13.69 percent, common equity tier 1 capital ratio equaled 11.00 percent, and the tangible common equity ratio totaled 9.30 percent.

CONFERENCE CALL

First Merchants Corporation will conduct a fourth quarter earnings conference call and web cast at 2:30 p.m. (ET) on Thursday, January 25, 2018.

To participate, dial (Toll Free) 877-507-0578 and reference First Merchants Corporation's fourth quarter earnings release. International callers please call +1 412-317-1073.  A replay of the call will be available until February 25, 2018. To access a replay of the call, US participants should dial (Toll Free) 877-344-7529, or for International participants, dial +1 412-317-0088. The replay passcode is 10114961.

In order to view the web cast and presentation slides, please go to http://services.choruscall.com/links/frme180125.html during the time of the call.  A replay of the web cast will be available until January 25, 2019.

Detailed financial results are reported on the attached pages.

About First Merchants Corporation

First Merchants Corporation is a financial holding company headquartered in Muncie, Indiana. The Corporation has one full-service bank charter, First Merchants Bank.  The Bank also operates as Lafayette Bank & Trust  and First Merchants Private Wealth Advisors (each as a division of First Merchants Bank).

First Merchants Corporation’s common stock is traded on the NASDAQ Global Select Market System under the symbol FRME. Quotations are carried in daily newspapers and can be found on the company’s Internet web page (http://www.firstmerchants.com).

FIRST MERCHANTS and the Shield Logo are federally registered trademarks of First Merchants Corporation.

Forward-Looking Statements

This release contains forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements can often, but not always, be identified by the use of words like “believe”, “continue”, “pattern”, “estimate”, “project”, “intend”, “anticipate”, “expect” and similar expressions or future or conditional verbs such as “will”, would”, “should”, “could”, “might”, “can”, “may”, or similar expressions. These statements include statements of First Merchants’ goals, intentions and expectations; statements regarding the First Merchants’ business plan and growth strategies; statements regarding the asset quality of First Merchants’ loan and investment portfolios; and estimates of First Merchants’ risks and future costs and benefits. These forward-looking statements are subject to significant risks, assumptions and uncertainties that may cause results to differ materially from those set forth in forward-looking statements, including, among other things: possible changes in monetary and fiscal policies, and laws and regulations; the effects of easing restrictions on participants in the financial services industry; the cost and other effects of legal and administrative cases; possible changes in the credit worthiness of customers and the possible impairment of collectability of loans; fluctuations in market rates of interest; competitive factors in the banking industry; changes in the banking legislation or regulatory requirements of federal and state agencies applicable to bank holding companies and banks like First Merchants’ affiliate bank; continued availability of earnings and excess capital sufficient for the lawful and prudent declaration of dividends; changes in market, economic, operational, liquidity, credit and interest rate risks associated with the First Merchants’ business; and other risks and factors identified in each of First Merchants’ filings with the Securities and Exchange Commission. First Merchants does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this press release. In addition, First Merchants’ past results of operations do not necessarily indicate its anticipated future results.

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31
	2017				2016
ASSETS
Cash and cash equivalents	$	154,905			$	127,927
Interest-bearing time deposits	35,027				24,459
Investment securities	1,560,602				1,304,505
Loans held for sale	7,216				2,929
Loans	6,751,199				5,139,645
Less: Allowance for loan losses	(75,032		)		(66,037		)
Net loans	6,676,167				5,073,608
Premises and equipment	95,852				94,432
Federal Home Loan Bank stock	23,825				17,964
Interest receivable	37,130				26,194
Goodwill and other intangibles	476,503				258,866
Cash surrender value of life insurance	223,557				201,671
Other real estate owned	10,373				8,966
Tax asset, deferred and receivable	23,983				39,384
Other assets	42,338				30,706
TOTAL ASSETS	$	9,367,478			$	7,211,611
LIABILITIES
Deposits:
Noninterest-bearing	$	1,761,553			$	1,348,267
Interest-bearing	5,410,977				4,208,231
Total Deposits	7,172,530				5,556,498
Borrowings:
Federal funds purchased	144,038				120,349
Securities sold under repurchase agreements	136,623				146,480
Federal Home Loan Bank advances	414,377				298,923
Subordinated debentures and term loans	139,349				128,445
Total Borrowings	834,387				694,197
Interest payable	4,390				3,110
Other liabilities	52,708				56,149
Total Liabilities	8,064,015				6,309,954
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding - 125 shares	125				125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 and 50,000,000 shares (1)
Issued and outstanding - 49,158,238 and 40,912,697 shares	6,145				5,114
Additional paid-in capital	834,870				509,018
Retained earnings	465,231				400,981
Accumulated other comprehensive income (loss)	(2,908		)		(13,581		)
Total Stockholders' Equity	1,303,463				901,657
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,367,478			$	7,211,611

⁽¹⁾ On May 1, 2017, the shareholders of First Merchants Corporation approved an amendment to the Articles of Incorporation to increase the number of shares of common stock authorized to issue from 50,000,000 to 100,000,000 shares.

CONSOLIDATED STATEMENTS OF INCOME	Three Months Ended								Twelve Months Ended
(Dollars In Thousands, Except Per Share Amounts)	December 31,								December 31,
	2017				2016				2017				2016
INTEREST INCOME
Loans receivable:
Taxable	$	76,470			$	53,895			$	263,704			$	210,302
Tax-exempt	3,018				2,096				10,694				6,525
Investment securities:
Taxable	4,477				3,893				17,489				16,415
Tax-exempt	5,830				4,862				21,379				18,622
Deposits with financial institutions	294				67				736				350
Federal Reserve and Federal Home Loan Bank stock	259				192				894				1,098
Total Interest Income	90,348				65,005				314,896				253,312
INTEREST EXPENSE
Deposits	7,835				3,886				23,806				15,914
Federal funds purchased	55				40				561				102
Securities sold under repurchase agreements	146				91				477				374
Federal Home Loan Bank advances	1,577				797				5,196				3,264
Subordinated debentures and term loans	1,970				1,817				7,572				7,185
Total Interest Expense	11,583				6,631				37,612				26,839
NET INTEREST INCOME	78,765				58,374				277,284				226,473
Provision for loan losses	1,800				2,417				9,143				5,657
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	76,965				55,957				268,141				220,816
OTHER INCOME
Service charges on deposit accounts	5,066				4,534				18,722				17,762
Fiduciary activities	3,345				2,500				11,589				9,818
Other customer fees	5,346				4,784				20,956				19,315
Earnings on cash surrender value of life insurance	1,133				886				6,577				4,273
Net gains and fees on sales of loans	2,355				1,886				7,564				7,052
Net realized gains on sales of available for sale securities	1,134				847				2,631				3,389
Other income	682				683				2,970				3,594
Total Other Income	19,061				16,120				71,009				65,203
OTHER EXPENSES
Salaries and employee benefits	33,760				22,994				119,812				102,552
Net occupancy	4,424				4,568				16,976				16,997
Equipment	3,898				3,069				13,090				12,497
Marketing	1,361				790				3,739				3,008
Outside data processing fees	3,378				2,672				12,242				9,148
Printing and office supplies	378				301				1,283				1,348
Intangible asset amortization	2,055				977				5,647				3,910
FDIC assessments	711				550				2,564				3,036
Other real estate owned and foreclosure expenses	311				574				1,903				2,877
Professional and other outside services	1,914				1,634				12,757				6,516
Other expenses	4,243				3,805				15,543				15,470
Total Other Expenses	56,433				41,934				205,556				177,359
INCOME BEFORE INCOME TAX	39,593				30,143				133,594				108,660
Income tax expense	15,210				7,850				37,524				27,609
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,383			$	22,293			$	96,070			$	81,051
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.49			$	0.55			$	2.13			$	1.99
Diluted Net Income Available to Common Stockholders	$	0.49			$	0.55			$	2.12			$	1.98
Cash Dividends Paid	$	0.18			$	0.15			$	0.69			$	0.54
Average Diluted Shares Outstanding (in thousands)	49,379				41,124				45,403				41,013

FINANCIAL HIGHLIGHTS
(Dollars in thousands)	Three Months Ended								Twelve Months Ended
	December 31,								December 31,
	2017				2016				2017				2016
NET CHARGE-OFFS	$	122			$	(164	)		$	148			$	2,073
AVERAGE BALANCES:
Total Assets	$	9,174,237			$	7,086,456			$	8,196,229			$	6,899,265
Total Loans	6,575,055				5,008,066				5,881,284				4,814,005
Total Earning Assets	8,139,993				6,367,973				7,335,702				6,180,050
Total Deposits	7,142,375				5,585,468				6,368,751				5,438,217
Total Stockholders' Equity	1,294,810				903,610				1,110,524				884,664
FINANCIAL RATIOS:
Return on Average Assets	1.06		%		1.26		%		1.17		%		1.17		%
Return on Average Stockholders' Equity	7.53				9.87				8.65				9.16
Return on Average Common Stockholders' Equity	7.53				9.87				8.65				9.16
Average Earning Assets to Average Assets	88.73				89.86				89.50				89.58
Allowance for Loan Losses as % of Total Loans	1.11				1.28				1.11				1.28
Net Charge-offs as % of Average Loans (Annualized)	0.01				(0.01		)		—				0.04
Average Stockholders' Equity to Average Assets	14.11				12.75				13.55				12.82
Tax Equivalent Yield on Earning Assets	4.67				4.32				4.53				4.32
Cost of Supporting Liabilities	0.57				0.42				0.51				0.43
Net Interest Margin (FTE) on Earning Assets	4.10				3.90				4.02				3.89
Efficiency Ratio	53.29				52.18				54.56				56.51
Tangible Common Book Value Per Share	$	16.96			$	15.85			$	16.96			$	15.85

NON-PERFORMING ASSETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2017				2017				2017				2017				2016
Non-Accrual Loans	$	28,724			$	32,253			$	27,347			$	27,920			$	29,998
Renegotiated Loans	1,013				626				384				876				4,747
Non-Performing Loans (NPL)	29,737				32,879				27,731				28,796				34,745
Other Real Estate Owned	10,373				11,912				11,893				8,293				8,966
Non-Performing Assets (NPA)	40,110				44,791				39,624				37,089				43,711
90+ Days Delinquent	924				425				634				123				112
NPAs & 90 Day Delinquent	$	41,034			$	45,216			$	40,258			$	37,212			$	43,823
Allowance for Loan Losses	$	75,032			$	73,354			$	70,471			$	68,225			$	66,037
Quarterly Net Charge-offs	122				(800		)		629				197				(164		)
NPAs / Actual Assets %	0.43		%		0.49		%		0.51		%		0.51		%		0.61		%
NPAs & 90 Day / Actual Assets %	0.44		%		0.50		%		0.52		%		0.51		%		0.61		%
NPAs / Actual Loans and OREO %	0.59		%		0.69		%		0.70		%		0.70		%		0.85		%
Allowance for Loan Losses / Actual Loans (%)	1.11		%		1.13		%		1.25		%		1.29		%		1.28		%
Net Charge-offs as % of Average Loans (Annualized)	0.01		%		(0.05		)%		0.05		%		0.02		%		(0.01		)%

CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2017				2017				2017				2017				2016
ASSETS
Cash and cash equivalents	$	154,905			$	146,607			$	142,650			$	104,247			$	127,927
Interest-bearing time deposits	35,027				72,950				48,305				20,439				24,459
Investment securities	1,560,602				1,468,887				1,343,323				1,327,217				1,304,505
Loans held for sale	7,216				4,514				4,036				1,262				2,929
Loans	6,751,199				6,483,448				5,613,144				5,274,909				5,139,645
Less: Allowance for loan losses	(75,032		)		(73,354		)		(70,471		)		(68,225		)		(66,037		)
Net loans	6,676,167				6,410,094				5,542,673				5,206,684				5,073,608
Premises and equipment	95,852				102,485				92,637				91,311				94,432
Federal Home Loan Bank stock	23,825				23,825				19,015				17,964				17,964
Interest receivable	37,130				32,366				27,597				25,174				26,194
Goodwill and other intangibles	476,503				478,558				309,686				257,963				258,866
Cash surrender value of life insurance	223,557				222,437				200,125				202,574				201,671
Other real estate owned	10,373				11,912				11,893				8,293				8,966
Tax asset, deferred and receivable	23,983				36,024				27,331				32,074				39,384
Other assets	42,338				38,744				35,758				30,991				30,706
TOTAL ASSETS	$	9,367,478			$	9,049,403			$	7,805,029			$	7,326,193			$	7,211,611
LIABILITIES
Deposits:
Noninterest-bearing	$	1,761,553			$	1,662,814			$	1,398,237			$	1,373,778			$	1,348,267
Interest-bearing	5,410,977				5,248,205				4,618,867				4,261,531				4,208,231
Total Deposits	7,172,530				6,911,019				6,017,104				5,635,309				5,556,498
Borrowings:
Federal funds purchased	144,038				100,000				134,608				102,000				120,349
Securities sold under repurchase agreements	136,623				142,107				127,884				139,007				146,480
Federal Home Loan Bank advances	414,377				406,820				312,715				338,919				298,923
Subordinated debentures and term loans	139,349				139,686				128,742				128,862				128,445
Total Borrowings	834,387				788,613				703,949				708,788				694,197
Interest payable	4,390				4,956				3,477				3,875				3,110
Other liabilities	52,708				61,695				45,383				48,751				56,149
Total Liabilities	8,064,015				7,766,283				6,769,913				6,396,723				6,309,954
STOCKHOLDERS' EQUITY
Cumulative Preferred Stock, $1,000 par value, $1,000 liquidation value:
Authorized -- 600 shares
Issued and outstanding	125				125				125				125				125
Common Stock, $.125 stated value:
Authorized -- 100,000,000 and 50,000,000 shares (1)
Issued and outstanding	6,145				6,143				5,394				5,131				5,114
Additional paid-in capital	834,870				833,451				593,904				509,953				509,018
Retained earnings	465,231				449,759				434,309				417,983				400,981
Accumulated other comprehensive income (loss)	(2,908		)		(6,358		)		1,384				(3,722		)		(13,581		)
Total Stockholders' Equity	1,303,463				1,283,120				1,035,116				929,470				901,657
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	9,367,478			$	9,049,403			$	7,805,029			$	7,326,193			$	7,211,611

⁽¹⁾ On May 1, 2017, the shareholders of First Merchants Corporation approved an amendment to the Articles of Incorporation to increase the number of shares of common stock authorized to issue from 50,000,000 to 100,000,000 shares.

CONSOLIDATED STATEMENTS OF INCOME
(Dollars In Thousands, Except Per Share Amounts)	December 31,				September 30,				June 30,				March 31,				December 31,
	2017				2017				2017				2017				2016
INTEREST INCOME
Loans receivable:
Taxable	$	76,470			$	71,491			$	59,386			$	56,357			$	53,895
Tax-exempt	3,018				2,851				2,492				2,333				2,096
Investment securities:
Taxable	4,477				4,524				4,180				4,308				3,893
Tax-exempt	5,830				5,455				5,091				5,003				4,862
Deposits with financial institutions	294				284				114				44				67
Federal Reserve and Federal Home Loan Bank stock	259				242				204				189				192
Total Interest Income	90,348				84,847				71,467				68,234				65,005
INTEREST EXPENSE
Deposits	7,835				6,710				5,137				4,124				3,886
Federal funds purchased	55				175				103				228				40
Securities sold under repurchase agreements	146				133				110				88				91
Federal Home Loan Bank advances	1,577				1,464				1,177				978				797
Subordinated debentures and term loans	1,970				1,945				1,840				1,817				1,817
Total Interest Expense	11,583				10,427				8,367				7,235				6,631
NET INTEREST INCOME	78,765				74,420				63,100				60,999				58,374
Provision for loan losses	1,800				2,083				2,875				2,385				2,417
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	76,965				72,337				60,225				58,614				55,957
OTHER INCOME
Service charges on deposit accounts	5,066				5,044				4,438				4,174				4,534
Fiduciary activities	3,345				2,995				2,609				2,640				2,500
Other customer fees	5,346				5,341				5,406				4,863				4,784
Earnings on cash surrender value of life insurance	1,133				1,575				2,971				898				886
Net gains and fees on sales of loans	2,355				2,317				1,617				1,275				1,886
Net realized gains on sales of available for sale securities	1,134				332				567				598				847
Other income	682				1,064				826				398				683
Total Other Income	19,061				18,668				18,434				14,846				16,120
OTHER EXPENSES
Salaries and employee benefits	33,760				33,244				27,076				25,732				22,994
Net occupancy	4,424				4,371				3,965				4,216				4,568
Equipment	3,898				3,478				2,907				2,807				3,069
Marketing	1,361				1,021				792				565				790
Outside data processing fees	3,378				3,162				3,086				2,616				2,672
Printing and office supplies	378				366				275				264				301
Intangible asset amortization	2,055				1,698				991				903				977
FDIC assessments	711				704				579				570				550
Other real estate owned and foreclosure expenses	311				330				731				531				574
Professional and other outside services	1,914				5,843				3,266				1,734				1,634
Other expenses	4,243				4,491				3,648				3,161				3,805
Total Other Expenses	56,433				58,708				47,316				43,099				41,934
INCOME BEFORE INCOME TAX	39,593				32,297				31,343				30,361				30,143
Income tax expense	15,210				7,939				7,207				7,168				7,850
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS	$	24,383			$	24,358			$	24,136			$	23,193			$	22,293
Per Share Data:
Basic Net Income Available to Common Stockholders	$	0.49			$	0.50			$	0.57			$	0.57			$	0.55
Diluted Net Income Available to Common Stockholders	$	0.49			$	0.50			$	0.57			$	0.56			$	0.55
Cash Dividends Paid	$	0.18			$	0.18			$	0.18			$	0.15			$	0.15
Average Diluted Shares Outstanding (in thousands)	49,379				48,644				42,244				41,221				41,124
FINANCIAL RATIOS:
Return on Average Assets	1.06		%		1.11		%		1.28		%		1.29		%		1.26		%
Return on Average Stockholders' Equity	7.53				7.83				9.82				10.15				9.87
Return on Average Common Stockholders' Equity	7.53				7.83				9.82				10.15				9.87
Average Earning Assets to Average Assets	88.73				89.16				89.97				90.43				89.86
Allowance for Loan Losses as % of Total Loans	1.11				1.13				1.25				1.29				1.28
Net Charge-offs as % of Average Loans (Annualized)	0.01				(0.05		)		0.05				0.02				(0.01		)
Average Stockholders' Equity to Average Assets	14.11				14.15				12.98				12.67				12.75
Tax Equivalent Yield on Earning Assets	4.67				4.56				4.44				4.42				4.32
Cost of Supporting Liabilities	0.57				0.53				0.49				0.44				0.42
Net Interest Margin (FTE) on Earning Assets	4.10				4.03				3.95				3.98				3.90
Efficiency Ratio	53.29				58.30				53.61				52.61				52.18
Tangible Common Book Value Per Share	$	16.96			$	16.62			$	16.97			$	16.49			$	15.85

LOANS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2017				2017				2017				2017				2016
Commercial and industrial loans	$	1,493,493			$	1,436,092			$	1,289,884			$	1,258,840			$	1,194,646
Agricultural production financing and other loans to farmers	121,757				117,751				75,746				77,021				79,689
Real estate loans:
Construction	612,219				498,862				442,389				336,931				418,703
Commercial and farmland	2,562,691				2,571,253				2,167,729				2,118,431				1,953,062
Residential	962,765				938,437				847,580				737,918				739,169
Home equity	514,021				502,240				436,038				423,708				418,525
Individuals' loans for household and other personal expenditures	86,935				86,406				79,887				77,590				77,479
Lease financing receivables, net of unearned income	2,527				3,877				232				261				311
Other commercial loans	394,791				328,530				273,659				244,209				258,061
Loans	6,751,199				6,483,448				5,613,144				5,274,909				5,139,645
Allowance for loan losses	(75,032		)		(73,354		)		(70,471		)		(68,225		)		(66,037		)
NET LOANS	$	6,676,167			$	6,410,094			$	5,542,673			$	5,206,684			$	5,073,608

DEPOSITS
(Dollars In Thousands)	December 31,				September 30,				June 30,				March 31,				December 31,
	2017				2017				2017				2017				2016
Demand deposits	$	3,746,654			$	3,562,718			$	3,015,846			$	2,861,384			$	2,866,853
Savings deposits	1,994,366				1,884,705				1,708,478				1,565,174				1,560,752
Certificates and other time deposits of $100,000 or more	468,895				503,668				362,589				312,327				276,274
Other certificates and time deposits	581,894				585,042				511,935				476,741				471,247
Brokered deposits	380,721				374,886				418,256				419,683				381,372
TOTAL DEPOSITS	$	7,172,530			$	6,911,019			$	6,017,104			$	5,635,309			$	5,556,498

NET INTEREST INCOME
(Dollars in Thousands)	For the Three Months Ended
	December 31, 2017											December 31, 2016
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing time deposits	$	87,172			$	294			1.35	%		$	49,835			$	66			0.53	%
Federal Reserve and Federal Home Loan Bank stock	23,825				259				4.35			18,041				193				4.28
Investment Securities: (1)
Taxable	755,341				4,477				2.37			710,902				3,893				2.19
Tax-Exempt (2)	698,600				8,969				5.14			581,129				7,480				5.15
Total Investment Securities	1,453,941				13,446				3.70			1,292,031				11,373				3.52
Loans held for sale	13,657				216				6.33			1,611				81				20.11
Loans: (3)
Commercial	4,806,978				60,015				4.99			3,655,414				41,830				4.58
Real Estate Mortgage	737,668				8,320				4.51			557,259				6,125				4.40
Installment	617,591				7,919				5.13			519,257				5,859				4.51
Tax-Exempt (2)	399,161				4,643				4.65			274,525				3,225				4.70
Total Loans	6,575,055				81,113				4.93			5,008,066				57,120				4.56
Total Earning Assets	8,139,993				95,112				4.67			6,367,973				68,752				4.32
Net unrealized gain on securities available for sale	4,131											7,221
Allowance for loan losses	(73,675		)									(63,999		)
Cash and cash equivalents	182,970											113,414
Premises and equipment	102,605											95,245
Other assets	818,213											566,602
Total Assets	$	9,174,237										$	7,086,456
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,970,916			$	2,185			0.44	%		$	1,524,324			$	730			0.19	%
Money market deposits	1,071,037				1,101				0.41			795,045				328				0.17
Savings deposits	922,052				214				0.09			766,232				164				0.09
Certificates and other time deposits	1,458,365				4,335				1.19			1,132,962				2,664				0.94
Total Interest-bearing Deposits	5,422,370				7,835				0.58			4,218,563				3,886				0.37
Borrowings	678,242				3,748				2.21			531,059				2,745				2.07
Total Interest-bearing Liabilities	6,100,612				11,583				0.76			4,749,622				6,631				0.56
Noninterest-bearing deposits	1,720,005											1,366,905
Other liabilities	58,810											66,319
Total Liabilities	7,879,427											6,182,846
Stockholders' Equity	1,294,810											903,610
Total Liabilities and Stockholders' Equity	$	9,174,237			11,583				0.57			$	7,086,456			6,631				0.42
Net Interest Income					$	83,529										$	62,121
Net Interest Margin									4.10	%										3.90	%
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2017 and 2016.  These totals equal $4,764 and $3,747 for the three months ended December 31, 2017 and 2016, respectively.
(3)  Non accruing loans have been included in the average balances.

NET INTEREST INCOME
(Dollars in Thousands)	For the Twelve Months Ended
	December 31, 2017											December 31, 2016
	Average Balance				Interest  Income / Expense				Average Rate			Average Balance				Interest  Income / Expense				Average Rate
Assets:
Interest-bearing time deposits	$	75,417			$	736			0.98	%		$	69,753			$	350			0.50	%
Federal Reserve and Federal Home Loan Bank stock	20,921				894				4.27			24,268				1,098				4.52
Investment Securities: (1)
Taxable	726,004				17,489				2.41			721,689				16,415				2.27
Tax-Exempt (2)	632,076				32,891				5.20			550,335				28,649				5.21
Total Investment Securities	1,358,080				50,380				3.71			1,272,024				45,064				3.54
Loans held for sale	7,707				462				5.99			4,050				372				9.19
Loans: (3)
Commercial	4,267,651				204,771				4.80			3,541,098				162,848				4.60
Real Estate Mortgage	679,284				30,267				4.46			566,050				25,156				4.44
Installment	573,100				28,204				4.92			485,111				21,926				4.52
Tax-Exempt (2)	353,542				16,452				4.65			217,696				10,039				4.61
Total Loans	5,881,284				280,156				4.76			4,814,005				220,341				4.58
Total Earning Assets	7,335,702				332,166				4.53	%		6,180,050				266,853				4.32	%
Net unrealized gain on securities available for sale	4,360											9,969
Allowance for loan losses	(70,380		)									(62,976		)
Cash and cash equivalents	142,503											105,443
Premises and equipment	97,446											96,023
Other assets	686,598											570,756
Total Assets	$	8,196,229										$	6,899,265
Liabilities:
Interest-bearing deposits:
Interest-bearing NOW deposits	$	1,730,272			$	5,817			0.34	%		$	1,427,535			$	2,579			0.18	%
Money market deposits	938,959				2,788				0.30			825,681				1,705				0.21
Savings deposits	844,825				734				0.09			731,902				618				0.08
Certificates and other time deposits	1,339,866				14,467				1.08			1,151,700				11,012				0.96
Total Interest-bearing Deposits	4,853,922				23,806				0.49			4,136,818				15,914				0.38
Borrowings	664,045				13,806				2.08			512,356				10,925				2.13
Total Interest-bearing Liabilities	5,517,967				37,612				0.68			4,649,174				26,839				0.58
Noninterest-bearing deposits	1,514,829											1,301,399
Other liabilities	52,909											64,028
Total Liabilities	7,085,705											6,014,601
Stockholders' Equity	1,110,524											884,664
Total Liabilities and Stockholders' Equity	$	8,196,229			37,612				0.51			$	6,899,265			26,839				0.43
Net Interest Income					$	294,554										$	240,014
Net Interest Margin									4.02	%										3.89	%
(1)  Average balance of securities is computed based on the average of the historical amortized cost balances without the effects of the fair value adjustments.
(2)  Tax-exempt securities and loans are presented on a fully taxable equivalent basis, using a marginal tax rate of 35 percent for 2017 and 2016.  These totals equal $17,270 and $13,541 for the years ended December 31, 2017 and 2016, respectively.
(3)  Non accruing loans have been included in the average balances.

For more information, contact:
Nicole M. Weaver, Director of Corporate Administration and Vice President
765-521-7619
http://www.firstmerchants.com

 

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